America's super rich are getting poorer. For only the fifth time since 1982, the collective net worth of The Forbes 400 — our annual tally of the nation's richest people — has declined, falling $300 billion in the past 12 months from $1.57 trillion to $1.27 trillion.

Faltering capital markets and real estate prices, along with divorce and fraud, pushed the fortunes of 314 members down and drove 32 plutocrats off the rankings.

Hurt the most: Warren Buffett, America's second-richest citizen. The Oracle of Omaha dropped $10 billion from his personal balance sheet as shares of Berkshire Hathaway fell 20% in 12 months. He is now worth $40 billion.

The 10 richest Americans lost a combined $39.2 billion in the past 12 months, a 14% decline.

Other big losers include casino mogul Kirk Kerkorian, whose nest egg shed $8.2 billion in the past year. Shares of his gambling giant MGM Mirage have fallen 90% from their October 2007 high.

Also hitting the brakes: Enterprise Rent-A-Car founder Jack C. Taylor. The rental car titan's fortune is down $7 billion in a year as the travel industry slows and private-company valuations fall.

The biggest gainer is banker Andrew Beal, who tripled his net worth to $4.5 billion buying up cheap loans and assets as the markets crumbled last fall.

Membership on the list was made easier as the price of admission dropped $350 million, from $1.3 billion last year to $950 million this year, paving the way for 19 new members and 19 returnees.

Newcomers to the list include Marvel Entertainment chief Isaac Perlmutter, whose net worth soared to $1.55 billion after Disney agreed to buy the superhero outfit in August for $4 billion in cash and stock.

Former New York lawyer and accountant Jeffry Picower makes his debut on The Forbes 400 with a net worth of $1 billion. A longtime investor with Bernard Madoff, he is likely worth billions more (Picower is alleged to have extracted billions of dollars from Madoff's fund before it collapsed).

Picower and his foundation are named in a lawsuit by the liquidator for Madoff's investment business, who is seeking to recover funds allegedly obtained through "fraudulent activity." Picower claims if he knew Madoff was a fraud he would not have transferred money into Madoff accounts.

In December 2008, the Picower Foundation shut down after losing its $1 billion endowment in Madoff's Ponzi scheme. The charity had given millions to MIT, Human Rights First and the New York Public Library. Picower made his first fortune selling medical device maker Alaris in 2004.

Among those returning is venture capitalist Michael Moritz, who rode Amazon's purchase of online shoe retailer Zappos and surging Google stock back onto the list.

Divorce forced Google exec Omid Kordestani from the rankings, while R. Allen Stanford lost his billionaire status when the feds froze his assets after charging him with allegedly running an $8 billion Ponzi scheme.

The wealthiest 10 percent of Americans -- those making more than $138,000 each year -- earned 11.4 times the roughly $12,000 made by those living near or below the poverty line in 2008, according to newly released census figures. That ratio was an increase from 11.2 in 2007 and the previous high of 11.22 in 2003.

Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997.

Poverty jumped sharply to 13.2 percent, an 11-year high.

"No one should be surprised at the increased disparity," said Richard Freeman, an economist at Harvard University. "Unemployment hurts normal workers who do not have the golden parachutes the folks at the top have."

Analysts attributed the widening gap to the wave of layoffs in the economic downturn that have devastated household budgets. They said while the richest Americans may be seeing reductions in executive pay, those at the bottom of the income ladder are often unemployed and struggling to get by.

Large cities such as Atlanta, Washington, New York, San Francisco, Miami and Chicago had the most inequality, due largely to years of middle-class flight to the suburbs. Declining industrial cities with pockets of well-off neighborhoods, such as Pittsburgh, Cleveland and Buffalo, N.Y., also had sharp disparities.

Up-and-coming cities with growing middle-class populations, such as Mesa, Ariz., Riverside, Calif., Arlington, Texas, and Henderson, Nev., were among the areas showing the least income differences between rich and poor.

It's unclear whether income inequality will continue to worsen in major cities, said William H. Frey, a demographer at the Brookings Institution. Many Americans are staying put for now in traditional cities to look for jobs and because of frozen lines of credit.

"During the years of the housing bubble, there was middle-class movement from unaffordable metros with high-income inequality," Frey said. "Now that the bubble burst, more of the population may be headed back to the high-inequality areas, stemming their middle-class losses."

As to poverty, the biggest shifts last year were increases in metropolitan areas in Florida and central California. Stockton, Calif., jumped from 14.1 percent to 16.8 percent, while Lakeland-Winter Haven, Fla., rose from 12.7 percent to 15.4 percent. Tampa-St. Petersburg, Orlando, Bradenton and Palm Bay -- all in Florida -- also saw gains in the share of poor residents.

Among other findings:

--Income at the top 5 percent of households -- those making $180,000 or more -- was 3.58 times the median income, the highest since 2006.

--Twenty-one states and the District of Columbia had higher poverty rates than the national average, many of them in the South, such as Mississippi (21.2 percent), Kentucky, Arkansas and Louisiana (each with 17.3 percent). That's compared with 19 states and the District of Columbia that ranked above U.S. poverty in 2007.

--Use of food stamps jumped 13 percent last year to nearly 9.8 million U.S. households, led by Louisiana, Maine and Kentucky. The increase was most evident in households with two or more workers, highlighting the impact of the recession on both working families and unemployed single people.

--Pharr, Texas, and Flint, Mich., each had more than a third of its residents on food stamps, at 38.5 percent and 35.4 percent, respectively.

--Between 2007 and 2008, income at the 50th percentile (median) and the 10th percentile fell by 3.6 percent and 3.7 percent, respectively, compared with a 2.1 percent decline at the 90th percentile. Between 1999 and 2008, income at the 50th and 10th percentiles decreased 4.3 percent and 9 percent, respectively, while income at the 90th percentile was statistically unchanged.

--Plano, Texas, a Dallas suburb, had the highest median income among larger cities, earning $85,003. Cleveland ranked at the bottom, at $26,731.

The findings come as the federal government considers new regulations to rein in executive pay at companies in which it has invested. President Barack Obama also typically cites the need for higher taxes on the wealthy to pay for health care overhaul and other measures, arguing that the wealthy have disproportionately benefited from tax cuts during the Bush administration.

The 2008 figures come from the Current Population Survey and the American Community Survey, which gathers information from 3 million households. The government first began tracking household income in 1967.

NEW YORK – Americans' worries about job security flared up in September, causing a widely watched barometer of consumer confidence to fall unexpectedly and raising more concern about the upcoming holiday shopping season.

The New York-based Conference Board, a private research group, said that its Consumer Confidence Index dipped to 53.1 in September, down from the revised 54.5 reading in August. Economists surveyed by Thomson Reuters had expected a reading of 57.

The index — fueled by signs that the economy might be stabilizing — had enjoyed a three-month climb since hitting a historic low in February of 25.3 but has been bumpy since June as rising unemployment has caught up with shoppers.

Economists watch consumer sentiment because spending on goods and services for consumers, including housing and health care, accounts for about 70 percent of U.S. economic activity by federal measures.

The Conference Board's Present Situation Index, which measures consumers' current assessment of the economy, declined to 22.7 from 25.4. The Expectations Index, which measures consumers' outlook over the next six months, dipped to 73.3 from 73.8 last month.

"While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes," said Lynn Franco, director of The Conference Board Consumer Research Center. "With the holiday season quickly approaching, this is not very encouraging news."

The big concern is the job market. Economists surveyed by Thomson Reuters project job losses slowed in September. On average, they predict 180,000 were lost this month, down from 216,000 in August. But Labor Department figures to be released this Friday are projected to show unemployment ticking up to 9.8 percent in September from 9.7 percent in August.

The weak job market, along with tight credit, has led shoppers to limit spending and focus on discounts when they do buy. Even those not worried about losing a job or finding a new one are embracing frugal behavior, buying only necessities and using more coupons.

Economists expect holiday sales to be at best flat from a year ago, the weakest holiday season since at least 1967 when the Commerce Department started collecting the data.

"Shoppers' habits have changed," said Frank Badillo, senior economist at consulting group TNS Retail Forward. "They remain focused on cutting back and trading down to discount retailers and to lower-priced brands. All of those behaviors are going to be enforced over the holidays."

Badillo projects sales for October through December won't change from last year, compared with the 4.5 percent decline last year from the year before.

The consumer confidence survey was sent to 5,000 households and had a cutoff date of Sept. 22.

The survey showed that consumers' appraisal of the job market was less favorable than the previous month. Those claiming jobs are "hard to get" increased to 47.0 percent from 44.3 percent, while those claiming jobs are "plentiful" decreased to 3.4 percent from 4.3 percent.

In the September 29, 2009 article "Group: Guinea protest death toll climbs to 157," Associated Press writer Alhassan Sillah provides an example of a country with abundant natural resources that lacks prosperity and significant economic growth:

CONAKRY, Guinea – Soldiers reeking of alcohol menaced Guinea's capital Tuesday, a day after the military's presidential guard shot at pro-democracy demonstrators in the West African country, leaving at least 157 people dead, a human rights group said.

The soldiers fired into the air as they roamed the deserted streets of the normally bustling capital. Guinea's military leader, who rose to power in a December coup, said Monday's violence was beyond his control.

Dr. Chierno Maadjou with the Guinean Organization for Defense of Human Rights said 157 people had been killed and more than 1,200 wounded on Monday.

An Associated Press reporter said he saw halls full of wounded patients at the city's large Donka Hospital, some with bullet wounds, others who appeared to have been beaten.

Opposition politician Mutarr Diallo said he witnessed soldiers raping women with rifle butts during Monday's protests. He was arrested during the protest but released Tuesday morning.

New York-based Human Rights Watch said eyewitnesses also told them that security forces had stripped female protesters Monday and raped them in the streets. Other eyewitnesses said soldiers had stabbed protesters with knives and bayonets.

Tensions have risen in Guinea amid rumors that military leader Capt. Moussa "Dadis" Camara may run in presidential elections set for Jan. 31. Camara said that the shootings by members of his presidential guard were beyond his control.

"Those people who committed those atrocities were uncontrollable elements in the military," he told Radio France International on Monday night. "Even I, as head of state in this very tense situation, cannot claim to be able to control those elements in the military."

Corinne Dufka, senior West Africa researcher at Human Rights Watch, said the killing of dozens of unarmed protesters is "shocking even by the abusive standards of Guinea's coup government."

"Guinea's leaders should order an immediate end to attacks on demonstrators and bring to justice those responsible for the bloodshed," she said.

The African Union, the European Union and the government of neighboring Senegal all quickly denounced Monday's violence. The AU had suspended Guinea's membership after Camara seized power in a December coup.

The African Union Commission condemned the "indiscriminate firing on unarmed civilians," and urged Guinean officials to respect the freedom of expression and assembly.

EU foreign policy chief Javier Solana called for the immediate release of arrested political leaders.

Opposition leader Sidya Toure, a former prime minister, was arrested during the protests and released Tuesday. When he returned home, he said he found it had been ransacked.

"I have come back to a broken home," he said. "What upsets me most is that they destroyed my library. All my books and souvenirs are gone."

Camara came to power in a coup hours after longtime dictator Lansana Conte died. Camara initially said he would not run in a presidential election set for Jan. 31 but recently said he has the right to run.

The opposition-led protest in the capital's main football stadium Monday drew some 50,000 people, with demonstrators chanting "We want true democracy."

On Aug. 27, police fired tear gas to break up a demonstration in the capital, and last Thursday tens of thousands of residents in a town north of Conakry took to the streets with no serious incidents.

Hardly anyone had heard of Camara, an army captain in his 40s, until Dec. 23, when his men broke down the glass doors of the state TV station. He announced that the constitution had been dissolved and that the country was now under the rule of a military junta.

In the days after the coup, Camara was initially embraced by Guineans, thousands of whom lined the streets to applaud his arrival on the back of a flatbed military truck.

But many began to question his tactics when he authorized raids on the homes of well-known members of Conte's inner circle. Camara claimed the raids were intended to recoup money and property stolen from the state, but some residents complained officials were using heavy-handed tactics.

Since winning independence half a century ago from France, Guinea has been pillaged by its ruling elite. Its 10 million people are among the world's poorest, even though its soil has diamonds, gold, iron and half the world's reserves of the raw material used to make aluminum.

In the September 28, 2009 article "Religious life won't be the same after downturn," Associated Press religion writer Rachel Zoll reports that the recession has strained the financial resources of churches and other religious organizations:

NEW YORK – Organized religion was already in trouble before the fall of 2008. Denominations were stagnating or shrinking, and congregations across faith groups were fretting about their finances.

The Great Recession made things worse.

It's further drained the financial resources of many congregations, seminaries and religious day schools. Some congregations have disappeared and schools have been closed. In areas hit hardest by the recession, worshippers have moved away to find jobs, leaving those who remain to minister to communities struggling with rising home foreclosures, unemployment and uncertainty.

Religion has a long history of drawing hope out of suffering, but there's little good news emerging from the recession. Long after the economy improves, the changes made today will have a profound effect on how people practice their faith, where they turn for help in times of stress and how they pass their beliefs to their children.

"In 2010, I think we're going to see 10 or 15 percent of congregations saying they're in serious financial trouble," says David Roozen, a lead researcher for the Faith Communities Today multi-faith survey, which measures congregational health annually. "With around 320,000 or 350,000 congregations, that's a hell of a lot of them."

The sense of community that holds together religious groups is broken when large numbers of people move to find work or if a ministry is forced to close.

"I'm really still in the mourning process," says Eve Fein, former head of the now-shuttered Morasha Jewish Day School in Rancho Santa Margarita, Calif.

The school, a center of religious life for students and their parents, had been relying on a sale of some of its property to stay afloat but land values dropped, forcing Morasha to shut down in June.

"I don't think any of us who were in it have really recovered," Fein says. "The school was 23 years old. I raised my kids there."

The news isn't uniformly bad. Communities in some areas are still moving ahead with plans for new congregations, schools and ministries, religious leaders say.

And many congregations say they found a renewed sense of purpose helping their suffering neighbors. Houses of worship became centers of support for the unemployed. Some congregants increased donations. At RockHarbor church in Costa Mesa, Calif., members responded so generously to word of a budget deficit that the church ended the fiscal year with a surplus.

"We're all a little dumbfounded," says Bryan Wilkins, the church business director. "We were hearing lots of stories about people being laid off, struggling financially and losing homes. It's truly amazing."

In the Great Depression, one of the bigger impacts was the loss of Jewish religious schools, which are key to continuing the faith from one generation to the next. Jonathan Sarna, a Brandeis University historian and author of "American Judaism," says enrollment in Jewish schools plummeted in some cities and many young Jews of that period didn't have a chance to study their religion.

Today, some parents, regardless of faith, can no longer afford the thousands of dollars in tuition it costs to send a child to a religious day school. Church officials fear these parents won't re-endroll their kids if family finances improve because it might be disruptive once they've settled into a new school.

Enrollment in one group of 120 Jewish community day schools is down by about 7 percent this academic year, according to Marc Kramer, executive director of RAVSAK, a network of the schools. A few schools lost as many as 30 percent of their students. Many of the hundreds of other Jewish day schools, which are affiliated with Reform, Conservative and Orthodox movements, are also in a financial crunch.

Kramer says 2009-10 will be a "make or break" year for Jewish education, partly because of the additional damage to endowments and donors from Bernard Madoff's colossal fraud.

Overall, U.S. Jewish groups are estimated to have lost about one-quarter of their wealth.

"It's going to be painful," Kramer says. "There will be some losses."

The Association for Christian Schools International, which represents about 3,800 private schools, says enrollment is down nationally by nearly 5 percent. About 200 Christian schools closed or merged in the last academic year, 50 more than the year before.

At least 80 members of the Association of Theological Schools, which represents graduate schools in North America, have seen their endowments drop by 20 percent or more.

The National Catholic Education Association is still measuring the toll on its schools, but expects grim news from the hardest hit states, after years of declining enrollment.

"Some schools that were on the brink — this whole recession has just intensified that," says Karen Ristau, president of the association.

Clergy in different communities say worship attendance has increased with people seeking comfort through difficult times, although no one is predicting a nationwide religious revival.

Americans for years have been moving away from belonging to a denomination and toward a general spirituality that may or may not involve regular churchgoing.

The 2008 American Religious Identification Survey found more people who call themselves "nondenominational Christians" and rising numbers who say they have no religion at all.

Before the stock market tanked last fall, only 19 percent of U.S. congregations described their finances as excellent, down from 31 percent in 2000, according to the 2008 Faith Communities Today poll.

Because of these trends, mainline Protestants were among the most vulnerable to the downturn. Their denominations had been losing members for decades and had been dividing over how they should interpret what the Bible says on gay relationships and other issues. National churches had been relying on endowments to help with operating costs, along with the generosity of an aging membership that had been giving in amounts large enough to mostly make up for departed brethren.

The meltdown destroyed that financial buffer.

The Episcopal Church, the United Methodist Church, the Evangelical Lutheran Church and other mainline denominations were forced to cut jobs and their national budgets.

The damage was felt across Methodist life. As of the summer, more than half of the church's 62 U.S. regional districts, or annual conferences, reported they had budget deficits. Some sold property and buildings to continue their ministries. Two national Methodist boards cut more than 90 jobs. Fifty bishops took a voluntary pay cut. Annual conferences in hard-hit regions, such as Florida and Ohio, lost thousands of members as people moved to find work elsewhere.

"Many of these groups have such large endowments that they're not going away," Roozen says. "But I think there's no question that they're going to be smaller both as organizations and in membership."

Roman Catholic dioceses for years had been struggling with maintaining their aging churches, paying salaries and health insurance and funding settlements over clergy sex abuse. With the hit to investment income and a drop in donations, they are now freezing salaries, cutting ministries and staff. The Archdiocese of Detroit, at the heart of the meltdown, had a $14 million shortfall in a $42 million budget in the fiscal year that ended in June 2008.

Conservative Protestant groups, known for their entrepreneurial spirit and evangelizing, were not immune. The 16.2 million-member Southern Baptist Convention, the largest Protestant group in the country, has had budget cuts in its North American Mission Board, at least three of its six seminaries and in its publishing and research arm.

Religious leaders say the next year or so will be key in determining which organizations survive the downturn intact. Even if the recession ends soon, religious fundraisers say the angst donors feel will not lift immediately, prolonging the difficulties for congregations, schools and ministries.

With enactment of the FY2009 Supplemental (H.R. 2346/P.L. 111-32) on June 24, 2009, Congress has approved a total of about $944 billion for military operations, base security, reconstruction, foreign aid, embassy costs, and veterans’ health care for the three operations initiated since the 9/11 attacks: Operation Enduring Freedom (OEF) Afghanistan and other counter terror operations; Operation Noble Eagle (ONE), providing enhanced security at military bases; and Operation Iraqi Freedom (OIF). Congress is currently considering the FY2010 War request that was submitted to Congress along with DOD’s baseline request. The House passed its bill on July 30, 2009 (H.R. 3326) and the Senate is expected to act on its version in late September 2009. This $944 billion total covers all appropriations approved by Congress for FY2001 to meet war needs through FY2009, the current fiscal year ending September 30, 2009. Of that total, CRS estimates that Iraq will receive about $683 billion (72%), OEF about $227 billion (24%) and enhanced base security about $29 billion (3%), with about $5 billion that CRS cannot allocate (1%). About 94% of the funds are for DOD, 5% for foreign aid programs and embassy operations, and less than 1% for medical care for veterans.

As of July 2009, DOD’s average monthly obligations for contracts and pay were about $10.9 billion, including $7.3 billion for Iraq, and $3.6 billion for Afghanistan. Compared to a year ago when the surge ended but troop levels remained high, average obligations have fallen by about 12%. Decreases in costs as troops are withdrawn from Iraq have been largely offset by increases in costs for additional troops for Afghanistan.

The FY2010 war request totals $139 billion including $130 billion for DOD for both wars, $6.4 billion for the State Department’s foreign and diplomatic operations, and $2.1 billion for VA medical costs for OEF and OIF veterans. Overall war funding is decreasing from the peak of $185 billion in FY2008 during the surge in Iraq to $150 billion in FY2009. This decline reflects primarily lower war-related procurement as DOD’s returned to a narrower, more traditional definition of war-related costs, rather than lower troop levels since increases for Afghanistan offset decreases for Iraq. Based on the current request, the cost of the Afghan and Iraq wars would fall by another 8% in FY2010, a decrease that is less than the currently planned 19% decrease in overall troop levels.

If the Administration’s FY2010 war request is enacted, total war-related funding would reach $1.08 trillion, including $748 billion for Iraq, $300 billion for Afghanistan, $29 billion for enhanced security, and $5 billion that cannot be allocated. Of this cumulative total, 69% would be for Iraq, 28% for Afghanistan, and 3% for enhanced security. On August 30, 2009, General Stanley McChrystal, Commander in Afghanistan, submitted a strategic assessment and a request for additional troops was reportedly given to Secretary of Defense Gates on September 26 , 2009. That request is unlikely to be vetted either within DOD and the Administration until additional ongoing White House reviews of the strategy are completed.

In a January 2009 update, the Congressional Budget Office projected that additional war costs for FY2010-FY2019 could range from $388 billion, if troop levels fell to 30,000 by 2011, to $867 billion, if troop levels fell to 75,000 by about 2013. Under these CBO projections, funding for Iraq, Afghanistan and the GWOT could total about $1.3 trillion to about $1.8 trillion for FY2001- FY2019 depending on the scenario.

PITTSBURGH – World leaders on Friday issued sweeping promises to fix a malfunctioning global economic system in hopes of heading off future financial meltdowns. President Barack Obama said actions taken so far "brought the global economy back from the brink."

"We leave here today confident and united," Obama said at the conclusion of a two-day gathering of the world's 20 top economies to deal with the worst financial crisis since the 1930s.

The leaders agreed to keep stimulus plans, which include government spending and low interest rates, generally in place in their respective countries for now to avoid derailing still-fragile recoveries. Obama had pressed for just such a course and praised the decision.

"Our coordinated stimulus plans played an indispensable role in averting catastrophe. Now we must make sure that when growth returns, jobs do, too," he said at a wrap-up news conference. "That's why we will continue our stimulus efforts until our people are back to work and phase them out when our recovery is strong."

In a statement, all the G-20 leaders declared major progress from what they called their coordinated efforts and "forceful response."

"It worked," they said.

Although many of the pronouncements and actions taken by the leaders lacked specifics or details on follow-through, leaders were bold in pronouncing the gathering — the third G-20 summit in a year — as a big success.

"There was unanimity around the table that the errors of the past won't happen again," said French President Nicolas Sarkozy.

"The old system of international economic cooperation is over. The new system, as of today, has begun," said British Prime Minister Gordon Brown, referring to a decision to enhance the status for the Group of 20 to make it the lead group for dealing with future international economic issues, eclipsing the older, Western-dominated Group of Eight.

"I have the impression that we are on a successful path," said German Chancellor Angela Merkel, before leaving Pittsburgh to fly back to Berlin, where she faces German voters on Sunday.

They moved to require members to subject their economic policies to the scrutiny of a peer review process that would determine whether they were "collectively consistent" with sustainable global growth. They promised tighter and more coordinated financial regulation.

And, repeating pledges from G-20 summits in November and April, when financial panic was rampant, they vowed anew to "reject protectionism in all its forms." They also went along with Obama's push for a pledge to withdraw government subsidies from fossil fuels such as oil, coal and natural gas linked to global warming.

While issuing lofty vows, the leaders failed to define how to accomplish many of them and were quickly back to bickering over details.

They did not suggest, for instance, how the peer review process would be enforced. And they failed to mention that previous pledges to avoid protectionism had been ignored by nearly all 20 members.

Disagreements over whether China should gain voting strength in the International Monetary Fund at the expense of European nations and over global warming language marred the summit.

Obama talked about actions of the G-20 as creating or saving "millions of jobs." Yet the U.S. economy alone has lost 3.1 million jobs since January when Obama took office. Since the recession started in December, 2007, some 6.9 million jobs have disappeared.

The group agreed to support changes in the makeup of the International Monetary Fund and World Bank.

The final statement said voting powers in the IMF "should reflect the relative weights of its members in the world economy, which have changed substantially in view of the strong growth in dynamic emerging market and developing countries."

Now, developed industrialized nations wield about 57 percent of the voting rights in the IMF to about 43 percent for developing nations. The G-20 leaders called for shifting shares from developed powers to emerging ones by at least 5 percentage points. They called for a similar shift at the World Bank. European countries, particularly France and Britain, have been resisting such changes.

Said Obama: "We brought the global economy back from the brink. We laid the groundwork today for long term prosperity."

"Pittsburgh was a perfect venue for this work," Obama said of the one-time despairing Rust Belt city. "This community has known its share of hard times. It picked itself up and dusted itself off. It serves as a model for turning the page to a 21st century."

Obama brushed off demonstrations in the city. He said they were mild compared with some in the past at international gatherings.

"I fundamentally disagree with their view that the free market is the source of all ills," he said. "Many of the protests are just directed generically at capitalism. ... One of the great things about the United States is you can speak your mind."

Obama said that tough new financial regulations backed by the G-20 summit would help avoid another economic crisis.

He also said that G-20 leaders would spare no effort to reach a global warming agreement at an international gathering later this year in Copenhagen. Summit leaders agreed to Obama's call to reduce government subsidies for fossil fuels. He said if fully implemented, the move would phase out $300 billion in global subsidies.

"All nations have a responsibility to face this challenge," he said.

Obama circulated among the leaders before the talks began, speaking to Chinese President Hu Jintao and Russian President Dmitry Medvedev.

Said Hu: "The foundation of an economic rebound is not yet solid, with many uncertainties remaining. A full economic recovery will take a slow and tortuous process."

Medvedev later said that there were limits to what the G-20 could do, even though it was an improvement over the G-8 grouping. "In the world, there are not just 20 countries, 20 economies, and therefore we have to think how the G-20 can work with the other countries that are not part of this club," the Russian president told reporters. He called the United Nations the most legitimate forum for this.

In an apparent reference to a recent trade spat in which the United States imposed punitive tariffs on Chinese tire imports, Hu called on the leaders to "resolutely oppose and reject protectionism in all forms."

Leaders papered over differences on the executive bonus issue by avoiding language for specific caps, something that France had pushed for but that the United States had opposed. A U.S. push for stronger requirements for bank capital — the cushion that banks hold against loan losses — was included, but with many of the specifics over how the capital would be determined left to set at later meetings.

The leaders also agreed to a U.S. proposal for a "framework for strong, sustainable and balanced growth" to deal with such issues as China's huge trade surpluses and the soaring U.S. budget deficit.

The streets of Pittsburgh were generally calm. A few thousand demonstrators pledging nonviolence banged drums, danced and held signs advocating assorted causes.

South Korean President Myung-bak said that his country will chair the G-20 next year and will host the next summit in November 2010.

Ever since Jesuit monks brought coffee to Guatemala three centuries ago, raising the beans has been a losing business for small farmers. Conditions are miserable — try lugging 100 lb. of fertilizer up a mountain — and even though coffee is the world's second most valuable traded commodity, after oil, the money it brings in is measly. "It's not enough to live on," says Luis Antonio, who has grown coffee near Quetzaltenango, in Guatemala's western highlands, for three decades but gets deeper in debt each year. "What we earn isn't enough to buy food for our children."

Antonio and the world's 25 million other small coffee growers don't have a lot of career alternatives. So you'd think they would be enthusiastic about Fair Trade — a global campaign that for 25 years has sought to bring struggling Third World farmers, including Antonio, out of poverty by paying them higher-than-market prices for everything from coffee to quinoa. Along the way, it has recruited retail giants like Starbucks, which is the globe's largest purchaser of Fair Trade — certified coffee.

But the future of the Fair Trade — coffee movement is in question, as some backers raise concerns about whether it has reached the limit of how much it can help. In a private-industry survey last year of 179 Fair Trade coffee farmers in Central America and Mexico, a copy of which TIME obtained, more than half said their families have still been going hungry for several months a year. "When I got the results, I was shocked," says Rick Peyser, director of social advocacy for Green Mountain Coffee Roasters in Vermont, the Fair Trade company that commissioned the survey. "I was ready to quit." Massachusetts Fair Trade firm Equal Exchange spokesman Rodney North admits, "There is a potential disconnect between what the buyer thinks Fair Trade is accomplishing and the situation on the ground," from Latin America to Asia.

Fair Trade pays $1.55 per lb. for Antonio's organic coffee, almost 10% more than the market price. But Antonio is left with only 50¢ per lb. after paying Fair Trade cooperative fees, government taxes and farming expenses. By year's end, he says, from the few thousand pounds he grows, he'll pocket about $1,000 — around half the meager minimum wage in Guatemala — or $2.75 a day, not enough for Starbucks' cheapest latte. The same holds true for other Guatemalan growers, like Mateo Reynoso, also from Quetzaltenango. Without Fair Trade, he says, "we wouldn't be growing coffee anymore." But even Fair Trade prices "haven't kept up" with the costs small farmers face, he adds.

For most coffee growers, Fair Trade is still slightly more lucrative than the open market. Two years ago, the Germany-based Fairtrade Labelling Organizations International (FLO), which sets worldwide prices and standards, raised the minimum per-pound price of nonorganic coffee 9¢, to $1.35 (a dime of which goes to social programs like scholarships for growers' children). That's 15¢ higher than the current market rate. And yet, according to Fair Trade researcher Christopher Bacon of the University of California, Berkeley, the per-pound price that's needed for farmers to rise above subsistence is really more than $2. Farmer advocates are urging the FLO to consider raising the price that much. But because such a big jump would probably mean Fair Trade could help fewer farmers — even Starbucks is likely to buy less java at that cost — the FLO is balking. "What good is it to have $2-per-lb. coffee if you can only serve tens of thousands of farmers" instead of millions? asks Paul Rice, president and CEO of TransFair USA, the California-based nonprofit that oversees Fair Trade in the U.S. "You risk killing the goose." Instead, the FLO's main growth strategy is to keep recruiting retailers like Starbucks. "We are going more and more mainstream," says FLO chief operating officer Tuulia Syvanen. "We're doing it to increase the market for our farmers."

Few foresaw this dilemma a decade ago, when coffee prices, which had been falling since the end of the Cold War, dropped to as low as 45¢ per lb. Fair Trade was the small farmer's savior during that crisis, paying twice the going rate. Starbucks joined the cause and this year has pledged to double the amount of Fair Trade coffee it buys, to 40 million lb., 40% of the Fair Trade beans the U.S. imports. The company declined to comment on whether Fair Trade's benefits fall short of its vision or how much it would need to raise prices if coffee were to climb to $2 per lb. Fair Trade "isn't the only reason I drink Starbucks, but it's a big one," says Connie Silver, a nurse, sipping a large, $4.15 Frappuccino outside a Miami store. Asked if she'd pay, say, $4.50 or even $5 to help absorb higher Fair Trade prices, Silver raises her eyebrows and says, "Wow, these days, that's a tough one."

In lieu of imposing a major price hike, the FLO is reviewing other ways it can help farmers. It's making cheaper loans more widely available, providing more technical assistance to help farmers grow better-quality beans and may begin automatically adjusting its minimum price for inflation.

With $1.75 billion in worldwide sales last year, Fair Trade is still a small player in the $70 billion global coffee industry, dominated by leviathans like Nestlé and Kraft. Because producer countries reap only $5 billion of that $70 billion, Fair Trade can help growers get more of their share. "Fair Trade is still, and will remain, a better deal for farmers," says Bacon. But it can help only so much. "This isn't a condemnation of the Fair Trade model," says Peyser. "It's a fact of life." One that all coffee drinkers may have to swallow.

"So bad that on 'Sesame Street,' they won't even talk about the letters A, I or G anymore."

Not that Leno was content to leave it at that. In fact, in eight months starting on Labor Day 2008, the comedian told no fewer than 863 jokes about the financial meltdown in his "Tonight Show" monologues, according to a Washington group that monitors such things.

Counting jokes is straightforward enough. It's a lot harder, of course, to gauge the more subtle ways in which the Great Recession has impacted our culture: How we interact, how we entertain ourselves, how we worship, what we wear and buy and read and watch.

One cultural message has been clear, and Leno's populist jokes reflect it: The country has been in no mood to celebrate ostentatious wealth, or those forces seen to have brought us to such a precarious place in our history.

But some historians say such a mood is in some ways cyclical, a phenomenon that has followed past recessions and then disappeared — until the next downturn.

"It's a critique that emerges periodically in our history, that consumption is corrupting," says Peter J. Kastor, a professor of history and American culture at Washington University in St. Louis. "Those concerns have been around since 1776." But, he says, we are a society of consumers, and that's what will ultimately prevail. Others agree.

"Certainly, you can see more critical attitudes toward conspicuous displays of wealth," says Bruce Schulman, a historian at Boston University. "And you can expect popular culture to reflect those attitudes. But we are a country that depends on consumption, and that's why I would not expect us to see really enduring cultural changes."

Perhaps that's also why some designers allowed themselves a little optimism at this month's Fashion Week shows in New York. The glitz of some previous spring seasons was gone, but in contrast to the more somber fall styles now in stores, one could spy some feathers and even a little tinsel from at least one influential label, Proenza Schouler.

"The last thing the world needs is another black pencil skirt," said Proenza's Lazaro Hernandez. "You want something that feels more joyful." And something different, he might have added, to bring women back to the stores and keep the industry afloat.

Designer clothes are, of course, accessible only to a few. One can't say the same for movies, which do well in times of economic distress because they're a relatively cheap, not to mention escapist, form of entertainment.

Indeed, Hollywood is coming off a huge summer in what's been a banner year, with revenues running at a record pace of $7.4 billion for the year, 7.8 percent ahead of 2008 ticket sales, according to box office tracker Hollywood.com.

Could the content of our films be impacted by the recession, just as the Great Depression fueled the popularity of Frank Capra's common-man-fights-corruption films? There's always a lag between current events and cinematic versions of them, because it takes time to get movies made. One upcoming film, though, promises a scathing look at the forces that contributed to the recession: Oliver Stone's "Wall Street 2," now filming, with Michael Douglas returning as Gordon Gekko, the voracious financier who uttered that famous line, "Greed is good."

As for comedy, look for Leno, David Letterman and others to continue to wring all the rueful jokes they can out of our economic woes. "Populist outrage is the undercurrent of all of it," says Dan Amundson, research director at the Center for Media and Public Affairs, which monitors the late-night shows. "Particularly for Leno, it's been a regular shtick." (A favorite Leno target has been AIG, the insurance giant bailed out by the government.)

The recession may also have changed the nature of our celebrity obsession. Take a look at your favorite celeb weekly these days, and the cover story will as likely be about a reality TV star, like Kate Gosselin of "Jon & Kate Plus 8," now famously split from her equally famous reality husband, as about a movie star or wealthy socialite like Paris Hilton.

"It brings the celebrity addiction down to our own level," says Samir Husni, director of the Magazine Innovation Center at the University of Mississippi. "It's a more serviceable fantasy. Not everyone can be Beyonce, but we can be Kate."

From celebrity worship to houses of worship: Though charity giving in America fell by 2 percent in 2008, forcing many groups to lay off staff, cut wages and eliminate programs, the same wasn't true of giving to religious organizations, which was actually up by 5.5 percent, according to a study by Giving USA.

And, in what could be called a further silver lining for religious institutions, many have sensed a renewed purpose in serving communities that need them more than ever.

"It's an opportunity for the church to be the church," says Susan DeLay, spokesperson for the Willow Creek megachurch outside Chicago, which has four campuses and a combined attendance of about 24,000 worshippers each week. "It's an affirmation of what God has called for the church to be. That's very satisfying."

Unlike some other churches in more hard-hit areas, attendance at Willow Creek has remained basically steady, while giving is down by 2 percent so far this year, DeLay says. Meanwhile, there's been a huge increase in demand for the church's services — such as the food pantry, where output is almost twice that of last year.

Demand has also gone up for the church's cars ministry, which gives donated cars to those in need, and for a career transition workshop. And also for premarital counseling, DeLay says: "It's interesting that people are eager to give their marriages the best chance."

Speaking of marriage, one might think the divorce rate would go up in times of economic difficulty. There are, however, no statistics yet available past 2007, according to the National Center for Health Statistics, which compiles the information from states.

Whether divorces are up or down, divorce attorneys say anecdotally that they're busy in court amending agreements because people's finances have changed, with some unable to keep up their financial obligations to their exes. Another product of both the recession and the collapse of the housing market: Some couples are staying together under the same roof, albeit unhappily, because they can't sell their homes or can't afford to divorce.

And then there are the more subtle effects of economic stress on family life, the lasting nature of which will likely depend on how long the recession itself lasts.

"Both as couples and as parents, adults under stress often forget to express the kind of daily appreciation of partners and children that makes family life go smoothly," says Stephanie Coontz, a professor of family studies at Evergreen State College in Washington state and the author of "Marriage, A History."

On the other hand, she notes, there may be long-range benefits from the economic meltdown, such as families learning to entertain and cook for themselves. They're figuring out how to spend time together, rather than money.

"When people can't afford to outsource family chores or pick up fast food, for example, they may rediscover the pleasures of doing some tasks as a family," she says.

"If the Great Depression is any guide, one long-term good result of this economic crisis could be to remind people that bad things can happen to good people, and that ultimately we are all in the same boat — or at least subject to the same tides."___

NEW YORK – Half the respondents of a new poll say taxing the richest Americans by at least 50 percent is a great idea, while more than a third consider Twitter a fad that will likely fade.

Those are among the findings of a new "60 Minutes"-Vanity Fair Poll released Sunday.

Nearly half of the respondents chose Wal-Mart as the institution that best symbolizes America today, leaving in the dust runners-up Google, Microsoft, the NFL, and the banking and securities firm Goldman Sachs.

Dining out was chosen most often by respondents as a luxury they hate sacrificing in these tough economic times. And 5 percent thought the best way to fight obesity among patrons of fast-food chains is to equip each restaurant with scales for them to weigh themselves.

A politician taking bribes is considered by far the greater sin (chosen by 37 percent of the respondents) when stacked against extramarital affairs (just 2 percent).

President Barack Obama has set a time table for a troop pullout in Iraq by 2011. But one-third of poll respondents predicted he won't be setting a time table for removing troops from Afghanistan. Meanwhile, 31 percent said he would time it to the beginning of the next presidential campaign, and 25 percent chose "in about a year."

Obama was edged out by George Clooney (24 percent to 26 percent) among respondents choosing "which man they would most like to trade places with for a week," followed by Tom Brady and Bruce Springsteen.

But among woman, First Lady Michelle Obama was the favorite, chosen by 26 percent, with Secretary of State Hillary Clinton picked by 16 percent, actress Angelina Jolie by 13 percent and singer Beyonce selected by 12 percent.

The poll is based on a random sample of 1,097 respondents nationwide. It was conducted by phone between Aug. 27 and 31 by CBS News.___

WASHINGTON – Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.

The deficits — $10 billion in 2010 and $9 billion in 2011 — won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large.

What happened? The recession hit and many older workers suddenly found themselves laid off with no place to turn but Social Security.

"A lot of people who in better times would have continued working are opting to retire," said Alan J. Auerbach, an economics and law professor at the University of California, Berkeley. "If they were younger, we would call them unemployed."

Job losses are forcing more retirements even though an increasing number of older people want to keep working. Many can't afford to retire, especially after the financial collapse demolished their nest eggs.

Some have no choice.

Marylyn Kish turns 62 in December, making her eligible for early benefits. She wants to put off applying for Social Security until she is at least 67 because the longer you wait, the larger your monthly check.

But she first needs to find a job.

Kish lives in tiny Concord Township in Lake County, Ohio, northeast of Cleveland. The region, like many others, has been hit hard by the recession.

She was laid off about a year ago from her job as an office manager at an employment agency and now spends hours each morning scouring job sites on the Internet. Neither she nor her husband, Raymond, has health insurance.

"I want to work," she said. "I have a brain and I want to use it."

Kish is far from alone. The share of U.S. residents in their 60s either working or looking for work has climbed steadily since the mid-1990s, according to data from the Bureau of Labor Statistics. This year, more than 55 percent of people age 60 to 64 are still in the labor force, compared with about 46 percent a decade ago.

Kish said her husband already gets early benefits. She will have to apply, too, if she doesn't soon find a job.

"We won't starve," she said. "But I want more than that. I want to be able to do more than just pay my bills."

Nearly 2.2 million people applied for Social Security retirement benefits from start of the budget year in October through July, compared with just under 1.8 million in the same period last year.

The increase in early retirements is hurting Social Security's short-term finances, already strained from the loss of 6.9 million U.S. jobs. Social Security is funded through payroll taxes, which are down because of so many lost jobs.

The Congressional Budget Office is projecting that Social Security will pay out more in benefits than it collects in taxes next year and in 2011, a first since the early 1980s, when Congress last overhauled Social Security.

Social Security is projected to start generating surpluses again in 2012 before permanently returning to deficits in 2016 unless Congress acts again to shore up the program. Without a new fix, the $2.5 trillion in Social Security's trust funds will be exhausted in 2037. Those funds have actually been spent over the years on other government programs. They are now represented by government bonds, or IOUs, that will have to be repaid as Social Security draws down its trust fund.

President Barack Obama has said he would like to tackle Social Security next year.

"The thing to keep in mind is that it's unlikely we are going to pull out (of the recession) with a strong recovery," said Kent Smetters, an associate professor at the University of Pennsylvania's Wharton School. "These deficits may last longer than a year or two."

About 43 million retirees and their dependents receive Social Security benefits. An additional 9.5 million receive disability benefits. The average monthly benefit for retirees is $1,100 while the average disability benefit is about $920.

The recession is also fueling applications for disability benefits, said Stephen C. Goss, the Social Security Administration's chief actuary. In a typical year, about 2.5 million people apply for disability benefits, including Supplemental Security Income. Applications are on pace to reach 3 million in the budget year that ends this month and even more are expected next year, Goss said.

A lot of people who had been working despite their disabilities are applying for benefits after losing their jobs. "When there's a bad recession and we lose 6 million jobs, people of all types are going to be part of that," Goss said.

Nancy Rhoades said she dreads applying for disability benefits because of her multiple sclerosis. Rhoades, who lives in Orange, Va., about 75 miles northwest of Richmond, said her illness is physically draining, but she takes pride in working and caring for herself.

In June, however, her hours were cut in half — to just 10 a week — at a community services organization. She lost her health benefits, though she is able to buy insurance through work, for about $530 a month.

"I've had to go into my retirement annuity for medical costs," she said.

Her husband, Wayne, turned 62 on Sunday, and has applied for early Social Security benefits. He still works part time.

Nancy Rhoades is just 56, so she won't be eligible for retirement benefits for six more years. She's pretty confident she would qualify for disability benefits, but would rather work.

"You don't think of things like this happening to you," she said. "You want to be in a position to work until retirement, and even after retirement."___

Saturday, September 26, 2009

Faculty and students protest state budget cuts, tuition fee increases and the University of California administration's handling of the California budget crises during a rally at the University of California Berkeley. (Robert Galbraith)

In the September 25, 2009 TIME magazine article "California's Budget Crunch: The Universities Protest," Kevin O'Leary reports that significant spending cuts to California's university system are prompting objections from citizens. This suggests that many people do not understand the concepts of tradeoffs. Californians pay less in taxes as a result of popular propositions, yet object to reductions in government services than are necessitated by reduced revenues.

Thousands of students, faculty and staff boycotted classes and staged rallies across the 10-campus University of California on Thursday to protest dramatic cuts to the system's budget and proposed additional hikes in undergraduate fees. At UC Berkeley, the flagship campus and home to famous student protests during the turbulent 1960s, an estimated 5,000 students, professors and university staff attended a noon rally at Sproul Plaza during the system-wide "Day of Action." At UCLA, about 700 people gathered at Bruin Plaza and at normally placid U.C. Irvine approximately 500 people attended the noon rally. One protester held a sign that read: "If I wanted to go to a private school, I would have been born into a rich family."

The University of California Regents, stung by a 20% cutback in state support due to the state budget crisis, are planning to increase student fees another 32%. The U.C. system must chop $637 million out of its budget this year following the agreement between Gov. Arnold Schwarzenegger and the legislature on how to close California's massive $26 billion shortfall in July. Many of the protesters believe the constant increase in fees over the past decade is endangering the university's mission as a public university that offers students an outstanding education at a cost that middle- and working-class families can afford.

U.C. Irvine Humanities Lecturer Keith Danner gave an idea of the cuts in his division alone. "On July 1, 2008 we had 80 full time support staff. On July 1, 2009, we had 67 full time staff and with another 26 layoffs coming we will have 41 staff or a 50% cut. These are the people that make departments run." There are rumblings among faculty and staff that the university is top heavy with administrators often paid more than $100,000. Yet while critical of the U.C. administration for not being more transparent in its approach to budgeting and for paying football coaches more than Nobel Prize winners, the protesters know the real problem lies in Sacramento.

"It's not just an economic crisis," says Shannon Steen, a U.C. Berkeley professor who helped form Save the University to protest cuts to the budget, "it's really a political crisis around the two-thirds rule in the legislature that holds the state hostage to a minority of legislators who are not doing what the people of California want." California is the only state in the nation that has a two-thirds requirement for the passage of tax increases and to pass a budget. These two rules are at the root of the state's chronic budget woes.

U.C. Irvine Anthropology Professor Victoria Bernal spoke passionately to about 125 students in the Social Science quad, saying "the beauty of the University of California is that that it is an elite intellectual institution, but it is not elitist. If there were huge problems with the University of California, that would be one thing. Instead, we are taking something that by all measures is a great success and tearing it down." Student leader Isaac Miller says the university community came together to "protest the de-funding of public education by the State of California and the crisis of priorities of the university administration." "It was stunning," says Steen. "In the 20 years since I was an undergraduate here, I have never seen anything like this."

"This is not about money. It is about values," said Bernal "Anything we do costs money. The question is: what are our priorities? Public education is a fundamental cornerstone of democracy in America. Without it only the well-to-do will receive the education and skills you need to take leadership positions in society." When Washington Monthly's annual college rankings, released this month, rated 258 universities according to contributions to the public good, U.C. Berkeley came in first, U.C. San Diego ranked second and UCLA ranked third. The rankings are on three broad categories: social mobility (recruiting and graduating low-income students), research (producing cutting-edge scholarship and PhDs), and service (encouraging students to give back to their country.)

The demonstrations did not disrupt schoolwork. A spokesman for UC President Mark Yudof said most classes were held and that "most of the action was at the rallies." But there will be more rallies. Protest organizers at Berkeley said that discussions are under way for a march on Sacramento that would include participants from the UCs, the 23-campus Cal State University system and the states' junior colleges. "This is just the beginning," says Miller. "It's a wake up call to students about what is happening to their education."

Several big airlines this week have added $10 surcharges on most tickets for travel on days around Thanksgiving and New Year's.

American and United added the charge for most of their fares for travel on Nov. 29, the Sunday after Thanksgiving, and Jan. 2 and 3. On Friday, US Airways Group Inc. matched the surcharge, and FareCompare.com said Delta Air Lines Inc. added it, too.

Spokespersons for Southwest Airlines Co. and Continental Airlines Inc. both said they had not added the surcharge.

Rick Seaney of FareCompare.com noted that the Sunday after Thanksgiving is one of the busiest travel days of the year, and that the two dates in January are heavily traveled as well.

He said the airlines probably added the charge rather than raise base fares because it was a quick, targeted way to charge more on busy travel days.

"The bottom line this year for consumers is that it's pretty clear that if you procrastinate on your holiday travel, you're going to get stung," he said.

He said holiday fares are still running 15 percent to 20 percent lower than last year, with prices to bigger cities carrying the bigger discount from a year ago.

Thursday, September 24, 2009

In the September 24, 2009 SmartMoney article "Social Security's New Math," Lisa Scherzer reports that Social Security payments in 2010 will not have the usual cost of living increase:

Come January 2010, seniors may do a double take after seeing their Social Security checks. The two to three percentage-point increase in benefits they usually get each year won’t be there.

That’s because, for the first time in three decades, there likely won’t be a cost of living adjustment (COLA). “People notice when their checks don’t change, says Bruce Meyer, a professor at the University of Chicago’s Harris School of Public Policy.

In the context of degraded home prices and investment losses, the change will feel like a loss to many seniors, even though benefit amounts for 2010 won’t shrink. Social Security benefits are adjusted every year to keep up with inflation, so that seniors can retain their purchasing power. Adjustments are based on the consumer price index for urban wage earners (CPI-W) between the third quarter (July-September) of the previous year and the third quarter of the current year. The 2010 COLA will be based on a period marked by sharp drops in prices and deflation.

Still, anxious seniors should keep in mind that they will actually come out ahead of inflation. “In a sense, older people are going to do fine because the cost of living is down and they’re not going to have their benefits cut,” says John Laitner, the director of the Retirement Research Center at the University of Michigan.

Here is the good and bad about a flat COLA.

Reasons to Fret

Next COLA increase will be in 2012: Not only won’t seniors receive an adjustment for 2010, but the Social Security and Medicare Trustees project no cost of living adjustment for 2011 and only a modest 1.4% increase in 2012. That means seniors won’t see higher payments until 2012. Of course, the Trustees report is a forecast, and next year’s report, which will take into account new data, could be revised.

Rising health-care costs: Older people get hit more by rising health-care costs than younger people do, says Pamela Herd, an associate professor of public affairs and sociology at the University of Wisconsin. That’s because seniors are disproportionate users of the health-care system and pay about 20% higher out-of-pocket health care costs than does the rest of the population. So while inflation hasn’t really been a concern, health-care costs are increasingly eating into seniors’ Social Security checks.

Higher Medicare premiums for some: Medicare Part B premiums have increased almost every year to keep pace with the growth in Part B expenditures. (Part B insurance helps pay for some services not covered by Part A, generally on an outpatient basis.)

For most of the 42 million Part B beneficiaries, the amount of the monthly Social Security COLA each year has been more than enough to offset the increase in the Part B premium – resulting in net increases in benefits, according to the Kaiser Family Foundation. But next year and in 2011, about 8% of Part B beneficiaries will be subject to higher premiums, sums that will be deducted from their Social Security payments. According to Kaiser, they'll pay $104.20 a month in 2010 and $120.20 in 2011, up from $96.40 this year.

On the Upside

The benefit bump: Social Security beneficiaries got an atypically large 5.8% increase in benefits in 2009 – the biggest in more than 25 years. That outsize increase was primarily because of 2008’s spike in oil prices, says Laitner. But since then the CPI increase was lost as energy prices fell. It was an excessively high COLA that raised the purchasing power of seniors’ benefits, actually putting them “ahead where they should be,” says Andrew Biggs, a resident scholar at the American Enterprise Institute, a nonprofit public policy group.

Seniors are better off than most: While the poverty rate increased from 2007 to 2008 and median household income fell, both indicators remained statistically unchanged for people 65 and older, according to last week’s Census report. “So the official data say that group is doing quite well – and all those numbers predated the 5.8% increase in Social Security benefits” this year, says Meyer of the University of Chicago.

The September 24 article "Much ado about multipliers" in The Economist magazine asks "Why do economists disagree so much on whether fiscal stimulus works?":

IT IS the biggest peacetime fiscal expansion in history. Across the globe countries have countered the recession by cutting taxes and by boosting government spending. The G20 group of economies, whose leaders meet this week in Pittsburgh, have introduced stimulus packages worth an average of 2% of GDP this year and 1.6% of GDP in 2010. Co-ordinated action on this scale might suggest a consensus about the effects of fiscal stimulus. But economists are in fact deeply divided about how well, or indeed whether, such stimulus works.

The debate hinges on the scale of the “fiscal multiplier”. This measure, first formalised in 1931 by Richard Kahn, a student of John Maynard Keynes, captures how effectively tax cuts or increases in government spending stimulate output. A multiplier of one means that a $1 billion increase in government spending will increase a country’s GDP by $1 billion.

The size of the multiplier is bound to vary according to economic conditions. For an economy operating at full capacity, the fiscal multiplier should be zero. Since there are no spare resources, any increase in government demand would just replace spending elsewhere. But in a recession, when workers and factories lie idle, a fiscal boost can increase overall demand. And if the initial stimulus triggers a cascade of expenditure among consumers and businesses, the multiplier can be well above one.

The multiplier is also likely to vary according to the type of fiscal action. Government spending on building a bridge may have a bigger multiplier than a tax cut if consumers save a portion of their tax windfall. A tax cut targeted at poorer people may have a bigger impact on spending than one for the affluent, since poorer folk tend to spend a higher share of their income.

Crucially, the overall size of the fiscal multiplier also depends on how people react to higher government borrowing. If the government’s actions bolster confidence and revive animal spirits, the multiplier could rise as demand goes up and private investment is “crowded in”. But if interest rates climb in response to government borrowing then some private investment that would otherwise have occurred could get “crowded out”. And if consumers expect higher future taxes in order to finance new government borrowing, they could spend less today. All that would reduce the fiscal multiplier, potentially to below zero.

Different assumptions about the impact of higher government borrowing on interest rates and private spending explain wild variations in the estimates of multipliers from today’s stimulus spending. Economists in the Obama administration, who assume that the federal funds rate stays constant for a four-year period, expect a multiplier of 1.6 for government purchases and 1.0 for tax cuts from America’s fiscal stimulus. An alternative assessment by John Cogan, Tobias Cwik, John Taylor and Volker Wieland uses models in which interest rates and taxes rise more quickly in response to higher public borrowing. Their multipliers are much smaller. They think America’s stimulus will boost GDP by only one-sixth as much as the Obama team expects.

When forward-looking models disagree so dramatically, careful analysis of previous fiscal stimuli ought to help settle the debate. Unfortunately, it is extremely tricky to isolate the impact of changes in fiscal policy. One approach is to use microeconomic case studies to examine consumer behaviour in response to specific tax rebates and cuts. These studies, largely based on tax changes in America, find that permanent cuts have a bigger impact on consumer spending than temporary ones and that consumers who find it hard to borrow, such as those close to their credit-card limit, tend to spend more of their tax windfall. But case studies do not measure the overall impact of tax cuts or spending increases on output.

An alternative approach is to try to tease out the statistical impact of changes in government spending or tax cuts on GDP. The difficulty here is to isolate the effects of fiscal-stimulus measures from the rises in social-security spending and falls in tax revenues that naturally accompany recessions. This empirical approach has narrowed the range of estimates in some areas. It has also yielded interesting cross-country comparisons. Multipliers are bigger in closed economies than open ones (because less of the stimulus leaks abroad via imports). They have traditionally been bigger in rich countries than emerging ones (where investors tend to take fright more quickly, pushing interest rates up). But overall economists find as big a range of multipliers from empirical estimates as they do from theoretical models.

These times are different

To add to the confusion, the post-war experiences from which statistical analyses are drawn differ in vital respects from the current situation. Most of the evidence on multipliers for government spending is based on military outlays, but today’s stimulus packages are heavily focused on infrastructure. Interest rates in many rich countries are now close to zero, which may increase the potency of, as well as the need for, fiscal stimulus. Because of the financial crisis relatively more people face borrowing constraints, which would increase the effectiveness of a tax cut. At the same time, highly indebted consumers may now be keen to cut their borrowing, leading to a lower multiplier. And investors today have more reason to be worried about rich countries’ fiscal positions than those of emerging markets.

Add all this together and the truth is that economists are flying blind. They can make relative judgments with some confidence. Temporary tax cuts pack less punch than permanent ones, for instance. Fiscal multipliers will probably be lower in heavily indebted economies than in prudent ones. But policymakers looking for precise estimates are deluding themselves.

In the September 24, 2009 article "Divorce in America: Ind., Fla. counties are tops," Associated Press writers Tamara Lush and Deanna Martin confirm that economic declines and their increases in unemployment are associated with other socially undesirable outcomes, such as an increase in divorces:

ISLAMORADA, Fla. – It's easy to see why bookkeeper Linda Mortimer moved to the Florida Keys 20 years ago: the impossibly blue water, the year-round sunshine, a lifestyle so laid-back that every day is like a Jimmy Buffett lyric.

What Mortimer didn't anticipate was falling in love — and then getting divorced less than two years after taking her wedding vows.

"I discovered after we got married that my husband had been divorced four times," said Mortimer, as she finished a noontime burger while sitting at the bar at the Ocean View, a local party spot and Mortimer's place of employment.

"I was his No. 5. He didn't understand why I got so upset."

Divorce is as common in the Florida Keys as fresh grouper and cold beer. Census statistics released this week show that Monroe County — which includes the cluster of 1,700 islands floating off South Florida — has the second-highest proportion of divorced residents. A little more than 18 percent of the people living in Monroe County are divorced, second only to Indiana's Wayne County, which had 19 percent. Nationwide, 10.7 percent of people over 15 are divorced.

Three of the top 10 counties the divorced call home are in Florida — rural Putnam County in Northeast Florida and urban Pinellas County on the Gulf Coast are the other two. Indiana had a total of three counties in the top 10 as well. Along with Wayne County, Floyd and Madison counties made the list.

Newly released census figures show that while the number of unmarried people continued its 10-year climb, the ranks of married people in the United States rose by nearly 6 million last year, bucking a decade-long decline. The number of divorced people rose, but only slightly.

Among the other marriage- and divorce-related findings from the census data:

• The number of unmarried people climbed to about one-third of all Americans over 15.

• Oklahoma has the highest rate of people who have been married three times or more.

• Utah and Idaho tied for the youngest median bride age, at 23.5 years old.

Residents of Wayne County, Ind., don't see why their home should be the divorce capital of America. The water tower in Richmond, Ind., the county's largest city, welcomes visitors to "A Great All-American City."

"It just doesn't make all that much sense," said Michael Jackson, an associate professor of psychology at Earlham College, a private university in Richmond. "We find it really questionable. It just sounds funny."

Indiana is one of a handful of states that don't track divorce statistics. So it's hard to tell if the percentage is caused by a large number of divorces or a large number of young single people moving out of the county to attend college, or if it's just a statistical anomaly.

Divorce counselors say the economy could be partly to blame for adding more stress to marriages. Indiana has been hit hard by the collapse of the auto and manufacturing industries. Wayne County had an average annual unemployment rate of 6.8 percent in 2008 — when the census data was collected — a rate above the state average at the time but still below many other areas of the state and country.

Tom Amyx, who owns a deli along Richmond's main street, said bad financial times shouldn't be a reason for married couples to split. He just celebrated his 40th wedding anniversary with his wife, Sherry, and says couples should tough out hard times. He said attitudes have changed about marriage, with some younger people considering it a less-than-permanent relationship that they can escape if they aren't happy.

"It's not ever about the other person anymore; it's about me, me, me," he said. "People need to make a commitment and stick to the commitment. It's not just a promise — it's a covenant. That's a very serious thing."

Amyx, who has lived in several other states, sees no reason Wayne County would top the list.

"We don't have that many people in the county," he said, "but evidently they get around."

Some folks in the Florida Keys are quick to say that it's not that people are actually divorcing in droves there — it's that divorced people come to the area to start new lives.

"The Keys are a great place to hide," said Mortimer, who is 60. When asked from what, she said: "Child support. Alimony."

A guy sitting next to Mortimer at the Ocean View bar finished his martini in a plastic cup. His chuckle nearly drowned out the Creedence Clearwater Revival song playing on the radio.

"The IRS. The CIA. Family," he said.

Others say that the party lifestyle — and a high cost of living — stresses families to the breaking point."This is a place of escape. A place of hedonistic abandon," said Dr. Fred Covan, a Key West therapist. "We have a condition here, we say people get Key Wasted. People come down here and do really, really stupid stuff."

Alcohol was named as a frequent culprit. People in Nevada, which at 14 percent had the highest divorce rate of any state, gave similar reasons.

Frank Lin, a divorce attorney whose firm, Lin & Associates, uses the phone number 702-DIVORCE, said Nevada laws, a 24/7 Sin City environment rich in temptation and other marriage hurdles probably combine to lead to more divorces.

"One of our clients was a bartender at the Palms and he started seeing a cocktail waitress at the Playboy Club. When I go to work, I don't have cocktail waitresses in high heels showing cleavage," Lin said. "He does — that's part of sort of his daily environment."

The most popular ad campaign in recent years promoting Las Vegas to tourists is "What happens here, stays here," and several party planners sell special divorce parties, offering the recently unmarried a guys' or girls' night out on the town.

But casino and nightclub employees aren't the only ones feeling marriage pressures, Lin said, because the rest of Las Vegas works a 24-hour cycle, too. Affairs aren't the only reason people get divorced here, he said.

"If both parties work 9-to-5 jobs, you see each other. But if one party works 9-to-5 and the other party works swing or graveyard, it's not an environment conducive to a marriage," Lin said.

Nevada's laws make it easier to get divorced compared with other states. Couples need only live in the Silver State six weeks before their marriage can be dissolved, while other states require longer residency and a cooling-off period.

Key West divorce lawyer Jiulio Margalli has noticed another trend among couples who are divorcing on the island paradise.

"What we have now is people getting divorced and fighting over who is going to take over the debt. Who's going to be saddled with the $800K mortgage that neither one could pay?" he said. "It used to be that we saw people get divorced and fight over the home. Now it's, 'Oh, my God, not only are we getting divorced, our credit is going down the tubes and we're going into foreclosure.'"

Regardless of the cause, having nearly 20 percent of the population divorced is cause for concern, said Brad Wilcox, director of the National Marriage Project at the University of Virginia.

"It's basically a social and environmental toxin," Wilcox said of divorce.

"The Concord Coalition believes that only with an engaged, informed and demanding public can the nation's fiscal challenges be met. The Fiscal Wake-Up Tour's mission is to cut through the usual partisan rhetoric and stimulate a more realistic public dialogue on what we want our nation's future to look like, along with the required trade-offs. We believe that elected leaders in Washington know there is a problem, but they are unlikely to act unless forced to by their constituents. The Tour began as a series of public forums around the country and now, in addition to those forums, we are organizing in-depth local committees to further focus attention on our nation's daunting long-term fiscal challenges."

In the September 24, 2009 Salon book review "John Maynard Keynes: Don't call it a comeback," Andrew Leonard says "The legendary economist has been dead for 60 years but still managed to help us avoid a second Great Depression."

The sudden present-day prominence of John Maynard Keynes, an economist who passed away 60 years ago and whose theories have been mercilessly ridiculed by conservatives for at least three decades, calls to mind the famous 1981 Rolling Stone magazine cover story on the Doors' Jim Morrison: "He's Hot, He's Sexy, and He's Dead."

We've witnessed quite the turnaround. From at least the 1970s on, Keynes' star was in eclipse, while Milton Friedman and the free market theorists of the Chicago School of Economics seized the commanding heights of economic discourse. To even mention Keynes was to be dismissed as hopelessly out of touch with state-of-the-art theory. Hadn't you heard? The government governs best when it governs least!

And yet today, you can't click your way three links through the econoblogosphere without stumbling into a flame war between reenergized triumphalist Keynesian supporters of government intervention in the economy and bewildered, angry market fundamentalists who have just watched their painstakingly constructed world crumble around them. Just a few years ago the heat of the debate would have been unthinkable -- Keynes seemed to have about as much relevance to current economic policymaking as Winston Churchill does for the Middle East peace process.

But global economic crises that obliterate the notion that markets are intrinsically self-correcting and efficient have a way of shaking things up. As the University of Chicago's Robert Lucas (who most explicitly does not fall in the pro-Keynes camp) said last October, "Well I guess everyone is a Keynesian in a foxhole ..." Meaning, basically: When shit happens, people want help. And since Keynes is the most illustrious proponent of the idea that government should help get economies back on track when they ride off the rails, his reputation is on the serious upswing.

Few people are better situated to comment or explain Keynes' current fashionableness than Lord Robert Skidelsky, author of the newly published "Keynes: The Return of the Master" -- which comes complete with the possibly overdone sub-headline: "Why, Sixty Years After His Death, John Maynard Keynes is the Most Important Economic Thinker for America."

Skidelsky has devoted the bulk of his creative life to Keynes. He spent decades producing a three-volume biography of the economist that won numerous awards and has already been abridged once -- into a merely 1,000-page tome! The new book, clocking in at a slender 220 pages (including notes), is thus a distillation of a distillation, shoehorned onto the recent economic crisis. Ironically for an author who spent so many years laboring over his definitive account, "The Return of the Master" feels a bit hasty, written as if with one eye focused on the headlines and Paul Krugman's latest blog post.

But that's OK. There is nothing awkward or opportunistic about speedily resurrecting Keynes in the wake of Wall Street's implosion -- it is, on the contrary, entirely appropriate. Keynes would not be surprised at the mess we are in today. While so many leading economists failed to predict or even conceive of the possibility of market failure on such an enormous scale, Keynes wouldn't have blinked an eye. One of his fundamental propositions was that the future was inherently unknowable, that we live in a constant state of "irreducible uncertainty." Shocks, depressions and recessions are bound to happen. The question is: What to do about them?

Anyone who followed the shouting earlier this year over the pros and cons of the Obama stimulus is familiar with the basic contours of that debate. Republicans, taking their cues from conservative economists, argued that the economy would recover on its own, and that government spending now would be equivalent to robbing the future, "crowding out" private investment, guaranteeing huge deficits and, eventually, crippling inflation. Democrats, taking their cues from Keynes, argued that we were trapped in a vicious cycle catalyzed by what the great economist called the "paradox of thrift." Individuals, worried about the future, abruptly began to save instead of spend, creating a "demand shock" that forced businesses to cut production and lay off workers, which further dampened consumer demand and caused the spiral of doom to accelerate. If government hadn't stepped in to break that cycle -- by unilaterally creating demand to jump-start the economy -- we would have run the risk of letting a recession metastasize into a depression.

Skidelsky's pithy summary:

When shocks to the system occur, agents do not know what will happen next. In the face of this uncertainty, they do not readjust their spending; instead, they refrain from spending until the mists clear, sending the economy into a tailspin.

Skidelsky deftly summarizes and explains basic Keynesian economics and how they apply to our current travails. He argues that the main reason we haven't already slipped into a second Great Depression can be attributed to the fact that the world's governments followed Keynes' maxim -- they acted. He also provides a nice capsule explanation of how Keynes was overshadowed by Friedman -- but anyone who has read Paul Krugman's recent New York Times Magazine piece, "How Did Economists Get It So Wrong?" will find the material familiar.

But to focus on the nitty-gritty of how Keynesian economics contradicts Chicago school efficient-market theory or is fulfilled by the Obama stimulus is to miss one of the key points that Skidelsky strives to make. Keynes, whom Skidelsky calls "the wisest and most intelligent economist of the last century," was in some ways a reluctant practitioner of the dismal science. He could just as easily have been a philosopher or a historian -- his interests were wide-ranging, his mind as agile and as easily distracted as a hummingbird. For Keynes, the challenge was not to come up with a comprehensive model of how "the economy" worked, but to ensure that human beings were able to live "wisely, agreeably, and well." The economy was but a means to that end. "To make the world ethically better," writes Skidelsky, "was the only justifiable purpose of economic striving." We fail, morally, when "we worship ... economic growth for its own sake, rather than as a way to achieve the 'good life.'"

To understand Keynes requires a detour into ethics and philosophy and a willingness to ponder such statements as "it cannot be readily assumed that what we desire is desireable." Such discourse, to put it bluntly, is not often found in the policy recommendations of contemporary economists, nor does it fit into their math-heavy models. But for Keynes, it was essential -- he wanted everyone to be able to live "the good life" -- and he did not equate that goal, necessarily, with the accumulation of wealth. If Keynes were alive today, suggests Skidelsky, he would agree with those critics of Wall Street who believe finance plays far too great a role in the economy. He would regard the machinations of hedge fund operators and investment bankers as chaff in a giant casino where all the players are dominated by the crass desire for money rather than by the imperative of living a meaningful life.

To your run-of-the-mill market fundamentalist, questions of ethics are irrelevant. Capitalism works by satisfying consumer needs and wants. Government should stay out of the way. But Keynes is on the comeback trail because our present-day predicament shows this to be manifestly untrue.

Let me give the microphone to Skidelsky. In a paragraph and a half, he asks a set of questions that are at the heart not just of his book, but of our existence on this planet.

Keynes looked forward to a saturation of wants. But he did not see this as a natural, but an ethical terminus. Wants were to be controlled not by the size of the stomach, but by a generally accepted conception of "sufficiency" for the good life.

In terms of arithmetic, he was almost spot on in his predictions of growing wealth, but attitudes have changed less than he expected. Although real incomes in rich countries have doubled in the last thirty years, the populations of these countries work harder than ever and are no happier. This raises the question of why they are still on the growth treadmill. Is it because capitalism needs constantly to expand markets, and ensnare by advertising more and more people into useless consumption? Is it because economists have ignored the fact that, as societies become wealthier, positional goods -- goods which satisfy not our needs, but our longing for status -- become more and more desirable? Is it because globalization has made affluence too insecure and too uneven in its spread for most people in wealthy societies to ease off work? Or is it because we lack any agreed idea of the good life in the name of which we can say "enough is enough"?

If Keynes were alive today, these would be questions he would be asking. And after reading "Keynes: The Return of the Master," one can only conclude that we would be well-served to have him out and about, confounding the status quo with his impertinence.

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I welcome comments. Please keep them civil, short and to the point. Obscene, profane, abusive and off topic comments will be deleted. Repeat offenders will be blocked. Thanks for taking part — and abiding by these simple rules.

The following information is provided to help you understand the biases that may be inherent in this blog.My primary U.S. economic policy concern is the fiscal irresponsibility of government.The Baby Boom generation, which I am part of, has spent the past 30 years accumulating massive public debt that will be passed to our children, grandchildren, and subsequent generations.I am not opposed to the reduction or elimination of any government spending program.Yet, politicians tend to call for reduced spending in general terms and fail to publicly declare specific cuts they would make.The primary cause of the massive U.S. public debt is revenue reductions (in the form of tax cuts) without similar decreases in government spending.

I am willing to consider the expansion and addition of government programs as well.I do not mind how much or little the government provides to society as long as it is paid for.I am willing to pay higher taxes for services deemed worthy, whether they be national defense, homeland security, or income assistance to those less fortunate than I.And I am certainly willing to pay less in taxes or to deposit any government check I receive.My generation, the Baby Boomers, has been very good at cutting taxes and increasing the size of government, regardless of which political party is in power.This is a prescription for financial chaos that remains a horrible legacy for future generations.

About Me

I am a professor of economics at Jacksonville University, where I teach courses in introductory economics, comparative economic development, and globalization. I use this blog to keep in touch with my current and former students. Teachers and students at other schools, as well as others interested in economic issues, are welcome to use this resource.